An estimated $500 million of medical debt could be eliminated for 150,000 lower-income residents with the new pilot program in LA County, according to the Department of Public Health.
The $5 million funding proposal, submitted by Supervisor Janice Hahn and co-authored by Supervisor Holly Mitchell, was approved by the LA County Board of Supervisors on Tuesday.
To launch the pilot program, LA County will partner with Undue Medical Debt, a charitable organization focused on eliminating personal medical debt, originally founded by former debt collection executives.
Medical debt is often bundled and sold at steep discounts to companies who gain profit from collecting that debt, according to the LA County Board of Supervisors.
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The founders of Undue Medical Debt, who used to collect the debt, are now canceling people’s debt by donations.
“We use donations to buy medical debt in large, bundled portfolios, pinpointing the debt of those most in need. This way, each $1 donation erases about $100 of medical debt,” the organization explained.
The County has not yet clarified the eligibility for the pilot program, but it was set to target the “lowest-income residents and the working poor who have catastrophic amounts of medical debt,” said Dr. Naman Shah of L.A. County Public Health.
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Medical debt for LA County residents exceeds $2.9 billion and is disproportionately affecting people of color, according to Public Health analysis.
7 in 10 U.S. adults say they receive medical bills they cannot afford, while 55% deferred medical care as a result of medical debt.
“No one should be driven into poverty because they got sick. But medical debt remains a huge problem in this country, and it can be devastating for families and their financial well-being,” said Supervisor Janice Hahn.
“This initial investment of $5 million towards eliminating crippling medical debt will significantly help our most vulnerable residents, many of whom have chronic illnesses and are struggling to pay huge out-of-pocket expenses,” said Supervisor Holly J. Mitchell.
Details regarding the pilot program and the timeline will be worked out and expected to be announced in the coming months.
Once the medical debt pilot program is completed, data on its effectiveness and potential scalability will help to determine broader future steps with medical debt relief.
